Print This Page

Date:   Mon, 5 Jan 2009
From:   Peter

Dear Sir:

Do I have to file 1040-ES and 540-ES for my 2008 disqualified disposition of ISO stock? Will there be any penalty for not doing so?

Peter

Answer

Date:   9 Jan 2009

Hello Peter,

Maybe.

There will be no penalty if you paid through withholding 100% of the tax on your 2007 income tax returns, or 110% if your 2007 adjusted gross income was more than $150,000.

See IRS Form 2210 and instructions at the IRS web site, http://www.irs.gov.

(By the way, the 2009 California estimated tax rules will be much more complex. You might want to study them at that web site if you expect to have to make estimated tax payments in addition to withholding. http://www.ftb.ca.gov)

Good luck!

Mike Gray

For more information about incentive stock options, request our free report, Incentive Stock Options - Executive Tax and Financial Planning Strategies.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained in this answer was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.